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New Delhi: Fortis Healthcare Thursday said ratings agency ICRA has upgraded its long-term credit rating as it has repaid the overdue debt obligations and cured the delays in debt servicing in May 2018.

The long-term rating of Fortis Healthcare Ltd for Rs 250 crore non-convertible debenture programme, Rs 105 crore fund-based limits, and Rs 195 crore term loans has been upgraded by ICRA from C to B plus, Fortis Healthcare said in a filing to BSE.

A 'C' rating denotes very high risk of default regarding timely servicing of financial obligations, while securities rated B-plus are relatively safer.

The ratings have been placed on watch with developing implications, the filing said.

Giving the rationale for the upgrade, ICRA said: "The ratings have been upgraded as the company has repaid the overdue debt obligations and has cured the delays in debt servicing in May 2018."

The company has also arranged additional funds which will enable it in managing its operations in the short term. However, it will remain reliant on debt funding and refinancing till the time the proposed deal with IHH Healthcare Bhd is consummated, it added.

"The conclusion of the deal will be a credit positive as it will result in infusion of Rs 4,000 crore equity into the company," ICRA said.

It will also help in funding the exit of private equity investors from SRL Ltd and in funding the proposed acquisition of assets of Business Trust listed on Singapore Stock Exchange, leading to elimination of service fees being paid to BT thus significantly increasing its future EBITDA, it added.

"The ratings are, however, constrained by the sharp decline in FHL's operating performance in FY2018 and Q1FY2019 due to drying up of liquidity of the company, internal challenges faced, plausible impact of cases of alleged medical negligence/overcharging and restrictions placed by NPPA on the pricing of cardiac stents and knee implants," ICRA said.

The operational performance is expected to remain weak and liquidity is likely to stay stretched till new management takes control and infusion of funds happen, subject to pending approvals, it added.

The ratings agency said it has noted the qualified and adverse opinion expressed by the statutory auditors as well as the systematic lapses and override of internal controls pointed out by the auditors.

However for Fortis Hospitals Ltd, ICRA said the ratings of the company have been reaffirmed and it has placed the ratings on watch with developing implications and has removed the negative outlook on long-term rating.

Similarly, regarding Escorts Heart Institute and Research Centre Ltd, ICRA said the ratings of the company have been reaffirmed and it has placed the ratings on watch with developing implications. It has also removed the negative outlook on long-term rating.